This really is a case study for Canada, but I am sure the business practices extend throughout the company globally. A little bit of background, I've collected air miles my entire adult life mostly because my family collected them, and it just seemed like something I should do. I got a free card, and some free air miles, but the first thing I realized is that I can't earn them fast enough unless I use a air miles rewarding credit card, but before getting that card, I never realized the value of a mile, that is until today when I thought about redeeming them. The rest of blog is going to talk about the dollar value of a mile, then the millions of better alternatives out there.
The value of a air miles is subjective, pending on what you use it for. One of the biggest problem with airmiles reward miles is that air miles controls what you can spend the air mile on. For most items you spend get your airmile will be worth 8-13cents a mile. In fact your are lucky to come by around 13c. Simple math, lets use them for Bose QC 15 for example -
Redeem for 3000 miles, retails for 349.99. Simple math is as follows (including GST):
349.99(1.05)/3000 = $0.12 for a mile
Math for PS3 redemption:
249.99(1.05)/3400 = $0.077 for a mile
Westjet Flight (pends on when you are booking):
$149/1200 = $ 0.13
Lets take the mid case of the three, and assume than an air miles is worth 12 cents. Now lets look at the earning structure : 99.99% of the time no pay/airmiles sponsors cards will give you 1 mile/ $20 you spend. Anyone that collects them know this statement to be true!
So if you spend $100, you get five air miles at .12 cents a mile, you get a total of: 60 cents back on items that air miles dictate you can have.Now thats the big problem, you can get lots of free cards that give you at least 1% cash back, and thats cash folks, you can spend that on anything you want. To recap in simple terms:
For every $100 spent:
Airmiles - .60c in airmiles sponsored items
Alternative - $1.00 in Cash
MBNA you can get 1% of everything, plus 3% on gas and groceries. Yes, filling up at Shell is also a bad idea, if you're in there for Air Miles. Way more value at Superstore (you are looking at getting $2/ $40 of spending vs $.24/ $40 of gas spending). The best card I can recommend is the Capital One World Travel card with $120.00 annual fee. But you get $100 back in annual points just for having the card, and 2 miles worth .01 a mile for every dollar you spend. Thats 2% back on any purchase for only $20. And you can spend these miles however you like, whatever flights you like, whatever hotels or car rentals --> its much much better than the air miles scam. As a marketer though, I have to respect Loyalty One for being able to see such a shit non competitive offering, and getting it engraved in people's mind as well as they have.If you got a vendetta against CapOne! Then I believe CIBC and RBC offer some great alternatives out there.
Now, you can get value out of the card provided you do not have an airmiles credit card. You just carry the regular card and don't actively shop at airmiles sponsors just because they are airmiles sponsors. But at the same time, its going to take so long to get any points back, you are almost better off not carrying the weight of the card in your wallet.
And no, I did not get paid by anyone to write this!
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